MEASURING FINANCIAL INCLUSION: THE Asli Demirguc-Kunt & Leora Klapper
OVERVIEW What is the Global Findex? The first individual-level database on financial inclusion that is comparable across countries and time Based on more than 150,000 interviews with adults ages 15+, representing more than 97 percent of the world s adult population What does it measure? The way in which adults in 148 economies save, borrow, make payments, and manage risk Includes 41 indicators, disaggregated by gender, age, education level, income, and residence (urban or rural)
OVERVIEW Why is the Global Findex valuable? Provides a tool to benchmark levels of financial inclusion, measure the impact of public policies, and identify potential clients and the demand for new products Uses a consistent methodology across time and countries Long-term project: the first round of data was released in April 2011, with updates in 2014 and 2017 Who are our partners? The survey was carried out by Gallup, as part of its annual World Poll The project is funded by the Bill and Melinda Gates Foundation
METHODOLOGY Questionnaire development 41 questions on savings, credit, payments, and insurance Developed by Global Findex team with input from a Technical Advisory Board, made up of researchers, policymakers, practitioners Piloted questions in 22 countries Representative samples Focus groups Cognitive interviews Field testing Lessons learned Add uses for accounts to prompt (payroll account ownership issue) Refined definitions included in questions (debit vs. credit card) Can t differentiate between types of institutions, people don t know No questions about savings in the home Distance to nearest bank too subjective
METHODOLOGY Added questions to the 2011 Gallup World Poll Gallup has surveyed about 145 economies annually since 2005 Survey carried out in 148 economies over the 2011 calendar year Including Afghanistan, D.R. Congo, Iraq, Haiti, Somaliland Represents 97% of world adult population (ages 15+) Survey translated into 141 languages At least 1,000 individuals per economy (more in China, India, Russia) Average response rate was 65%
METHODOLOGY Face-to-face vs. phone interviews Face-to-face interviews in countries where telephone coverage represents less than 80% of population (126 out of 148 countries) Telephone interviews in 22 countries, using Random Digit Dialing Multi-stage stratified sampling Stratification by municipality population, geography, or both Stratification varies by region but in SSA & LAC is done using consistent, population-based categories: ostrata 1: cities with population >1 million ostrata 2: cities 500K-999K ostrata 3: cities 100K-499K ostrata 4: cities 50K-99K ostrata 5: towns 10K-49K ostrata 6: towns/rural villages <10K
METHODOLOGY First stage: identification and selection of PSUs (Primary Sampling Units) proportional to population Second stage: random route procedures used to select sample households. Unless outright refusal occurs, interviewers make up to three attempts to survey sampled household at different times of day, on different days If interview cannot be obtained, substitution method used. Third stage: respondents randomly selected within households using Kish grid
METHODOLOGY How best to incorporate the Global Findex questionnaire into national surveys? Use as a baseline Global Findex team happy to provide feedback from the field on specific country cases Recommendations for modifications? More detail on country-, or region-specific trends: bank agents in LAC, mobile money in Haiti/India/SSA, informal savings groups in SSA, remittances in EAP Ability to gather information on specific institutions (not within scope of international survey, too much variation) Add financial literacy component?
ACCOUNTS AND PAYMENTS Over 2.5 billion adults do not have a formal account 41% of adults in developing economies are banked compared to 89% of adults in highincome economies 37% of women in developing economies are banked compared to 46% of men 23% of adults living below $2 per day have a formal account
ACCOUNTS AND PAYMENTS Women, youth, the poor, and rural residents are the least likely to have a formal account Adults in the poorest income quintile in developing economies are half as likely to be banked as adults in the richest quintile A 6-9 percentage points gender gap persists across income groups in developing economies
ACCOUNTS AND PAYMENTS 66 percent of unbanked report not enough money 31 percent of unbanked in Sub-Saharan Africa choose Too far away 31 percent of unbanked in Europe and Central Asia choose [I] don t trust banks 40 percent of unbanked in Latin America and the Caribbean choose They are too expensive
ACCOUNTS AND PAYMENTS 38% of account holders in SSA use their account to receive money from family living elsewhere 61% of account holders in ECA use their account to receive wages compared to 34% of all account holders in developing economies and 56% of account holders in high-income economies 26% of account holders in LAC use their account to receive payments from the government compared to 15% of all account holders in developing economies and 47% of account holders in high-income economies
ACCOUNTS AND PAYMENTS 16% of adults in SSA use a mobile phone to pay bills, send or receive money in the past year 68% of adults in Kenya use mobile money technology, driven by the early success of M-PESA 52% of adults in SSA who use mobile technology to transfer money are otherwise unbanked 5% of adults in all developing economies use mobile money technology
SAVING 31% of adults in developing economies saved in the past year 56% of savers in developing economies saved using a formal financial institution 48% of savers in in Sub-Saharan Africa saved using a community-based method 40% of account holders in developing economies saved formally in the past year
CREDIT AND RISK MANAGEMENT 7% of adults in developing economies have a credit card compared to 50% of adults in high-income economies 3% of adults in developing economies report having a mortgage outstanding compared to 24% of adults in high-income economies 17% of adults personally purchased health insurance; 6% of adults working in farming, forestry, or fishing have crop, rainfall, or livestock insurance in the past year
CREDIT AND RISK MANAGEMENT What to look for in 2014. 1) Success of G2P reforms? 2) Mobile money taking off anywhere other than East Africa? 3) Closing the gender gap? 4) Movement in self-reported barriers to access?
WEBSITE There is much more information on the Global Findex website: Report and Notes (in Spanish, French, & Russian) The complete questionnaire (in 15 languages) The complete country-level database Analytical tools to make customized maps and graphs
DATA TOOLS How can one use the Global Findex database to better understand how people in a given country or region save, borrow, make payments or manage risk? For example: let s say that a financial institution wants to know if there is unmet demand for savings products directed at women and rural residents. How could we use the Global Findex to answer this question?
DATA TOOLS There are four obvious questions here: Question 1: What percentage of the general adult population saves? Question 2: Do women and rural residents save more or less than the general population? Question 3: What percentage of the general adult population saves formally? Question 4: Do women and rural residents save formally more or less than the general population? We can use the Global Findex database and the example of El Salvador to investigate
DATA TOOLS On the main page of the Data Portal, the user can select a country to analyze in more depth
DATA TOOLS The main indicators and basic graphs for El Salvador 14% account penetration, 4% have a formal loan
DATA TOOLS We need more detailed information, so we access the main database.
DATA TOOLS Select from 41 indicators disaggregated by gender, age, education, income, residence
DATA TOOLS The results! The user can download data, make a chart or map, or modify their search
DATA TOOLS What did we learn? Question 1: What percentage of the general adult population saves? 26% Question 2: Do women and rural residents save more or less than the general population? About the same, 24%, 25%, respectively Question 3: What percentage of the general adult population saves formally? 50% Question 4: Do women and rural residents save formally more or less than the general population? 36%, 40% Although women and rural residents are equally likely to save as the general population, they are far less likely to do so formally. Is there unmet demand for formal savings product among these groups?
DATA RELEASE In November, it will be possible to download and analyze the raw, microdata users will be able to cut the data in millions of different ways and answer very specific questions.
FINANCIAL INCLUSION How else can the Global Findex support financial inclusion? The Global Findex questionnaire can be used as a base to develop financial inclusion survey modules on a national level The Global Findex team is working with several governments (India, Peru, etc) to incorporate a financial inclusion module in national surveys The Global Findex questionnaire is available online in 15 languages, and is available upon request in 141 languages
DATA RELEASE Global Findex Suite of Products Financial Inclusion Data Portal World Bank eatlas of Financial Inclusion The Little Data Book on Financial Inclusion 2012 Global Financial Inclusion Microdata Databank (October 2012) Reference citation for the Global Findex: Asli Demirguc-Kunt and Leora Klapper, 2012, Measuring Financial Inclusion: The Global Findex Database, World Bank Policy Research Paper 6025 www.worldbank.org/globalfindex